No licence needed for electric vehicle charging station

Setting up charging stations for electric vehicles does not need a separate licence under the Electricity Act of 2003, the government has said, giving a big boost to ambitious EV plans.

The clarification follows confusion over whether during charging of the battery for use in electric vehicles, the charging station performs any activity of transmission, distribution or trading of electricity, which would require a license under the Act.

“The charging of battery essentially involves utilisation of electrical energy for its conversion to chemical energy, which gets stored in the battery. Thus, charging of the battery of an electric vehicle by a charging station involves a service requiring consumption of electricity by the charging station and earning revenue for this purpose from the owner of the vehicle,” the power ministry said in a recent statement.

The industry has welcomed the clarification, saying it would create a level playing field for different stakeholders in the sector.

“In absence of such clarification, stakeholders were not sure of which business model to adopt for providing charging infra for consumers. Now, PSUs, private players, discoms, original equipment manufacturers, etc can join hands in developing a robust and appropriate charging infra for wider adoption of EVs in India,” said Awadhesh Kumar Jha, vice president-Charge & Drive and Sustainability at Fortum India.

The activity does not in any way include the sale of electricity to any person as electricity is consumed within premises owned by the charging station, which may be connected to the distribution system or otherwise for receiving electricity, the ministry added.

The clarification sets aside monopoly licensing in favour of an open and competitive development.

The market will get a boost from corporate and commercial space owners who can readily put together the supply, infrastructure and services, said Kameswara Rao, leader-energy, utilities and mining at PwC India.

“The state utilities, which could have taken lead, now risk losing entirely as it won’t be easy for them to get capital for non-licensed business. They may still gain an early mover advantage by putting together a PPP offering bulk supply and services,” Rao added.

A robust charging infrastructure is the key in encouraging the adoption of electric vehicles.

Jha of Fortum, which looks to install about 160 charging station in the country in one year, said access to locations like metros, airports, parking areas is crucial for public charging.

“In cities, most of such land belongs to the government or government-controlled/owned agency. It would be essential that certain percentage of the parking area in these locations be reserved for EV charging so charging infra players can provide charging station,” Jha added.

The decision from the power ministry comes after detailed examination in consultation with various stakeholders, including Central Electricity Authority.